By Shashwat Chauhan and Avinash P
July 7 (Reuters) – The Nasdaq was set to open lower on Tuesday amid declining chip stocks, with investors questioning the momentum of the AI-led rally despite Samsung’s strong earnings, while a report on China’s DeepSeek making its own AI chip also hit sentiment.
Nvidia fell 1.5% in premarket trading after Reuters reported the Chinese startup is developing its own AI chip, a move that could reduce its reliance on Nvidia and Huawei chips.
Memory chipmakers drove losses meanwhile, with Micron Technology down 4.7%, Western Digital off 6.3% and Sandisk losing 4.6%.
Samsung Electronics’ shares sank in South Korea despite the company reporting a 19-fold jump in second-quarter operating profit and surpassing its combined earnings over the past three years.
“The (Samsung) results were in themselves fundamentally good but it seems then to have a knock-on effect at general markets that once people start being negative about Samsung, that negativity extends across markets,” said Michael Field, chief equity market strategist at Morningstar.
“This is the problem coming up to earnings season as well, that we’re likely to see a lot of volatility. The markets are something on a knife-edge going into earnings season.”
Chip stocks have been some of the biggest winners of the AI trade so far this year amid hopes of insatiable AI demand, though concerns of the sector being overbought as well as profit-taking by investors have led to some volatility lately.
Other chip-related stocks including Intel fell 3.3%. Marvell Technology also eased and was down 4.5% amid sectorwide weakness.
Another test of the appetite for chip stocks looms later this week, when South Korean giant SK Hynix’s U.S. listing begins trading on the Nasdaq.
Elon Musk’s SpaceX was set to begin trading as part of the Nasdaq-100 index on Tuesday and a wave of brokerages initiated coverage on the stock as an industry-mandated quiet period ended. Its shares were last up 0.4%.
At 08:31 a.m. ET, Dow E-minis rose 156 points, or 0.29%, S&P 500 E-minis lost 8.25 points, or 0.11%, and Nasdaq 100 E-minis shed 247 points, or 0.82%.
Dow futures bucked the trend as software plays Microsoft, Salesforce and IBM rose. The blue-chip index crossed the 53,000-point mark on Monday for the first time ever.
The index clocked its fifth 1,000-point milestone this year as receding oil prices on the back of easing Middle East tensions have offered some support.
Oil prices, however, rose on Tuesday following reports of attacks on vessels near the Strait of Hormuz.
Fiserv climbed 5.5% after media reports that the payments firm had held discussions with U.S. banks including JPMorgan and Bank of America to sell its payments infrastructure business handling debit card transactions.
Rivian dropped 10.7% after the electric-vehicle maker launched an offer to sell 75 million shares even as it forecast second-quarter revenue above analysts’ estimates.
Meanwhile, U.S. Federal Reserve watchers will get another glimpse into how new Chair Kevin Warsh steers the central bank when the minutes of its last meeting are released on Wednesday, the first of his tenure.
Traders currently see at least one 25-basis-point rate hike on the cards this year, according to data compiled by LSEG.
(Reporting by Shashwat Chauhan and Avinash P in Bengaluru; Editing by Pooja Desai)
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